Deciding When to Cash In Your Social Security Retirement Benefits

Social Security taxes cover five categories: retirement, disability, family, survivors, and Medicare. At this time, workers with earnings of less than $87,000 per year pay 7.6 percent of their income to Social Security. (Employers match workers by paying in the same amount.) The self-employed pay a total rate of 15.3 percent of income less than $87,000 per year.

As you work, you earn credits toward your retirement. People born in 1929 or later need at least 40 credits to receive retirement benefits. Your actual earnings determine the amount of Social Security benefits you receive. Full retirement age gradually is increasing, depending on the year of your birth. You can receive benefits at age 62, but they’re reduced. The average age of retirement is 65. If you hold off until age 70, you get a larger benefit check.

Your Social Security statement details all three scenarios. Since 1999, the law requires the Social Security Administration (SSA) to send a Social Security Statement every year to all workers who are ages 25 and older who aren’t receiving Social Security benefits. If you don’t automatically receive your statement, you can request one from Social Security online or call toll-free 800-722-1213 and request that form SSA-7004 be mailed to you. You’ll receive your statement in the mail in about two to four weeks after your online request.

If you’re uncertain about when to cash in your Social Security benefits, refer to the Social Security benefits calculators. You’ll find three styles of calculators:

  • Quick calculator: This quick-estimate calculator makes use of your date of birth and years' earnings. To use this calculator, you must be older than 21 years old and younger than 65 years old.

  • Online calculator: This online calculator requires your date of birth and complete earnings history, and it projects your future earnings. This calculator is similar to what’s shown on your Social Security — the one you receive on a regular basis from the SSA.

  • Downloadable detailed calculator: The third calculator is a free downloadable program that provides the most precise and detailed estimates. Keep in mind that your Social Security records are private.

For more information about your Social Security benefits, check online at one of these sites:

  • AARP maintains a Social Security Center on its Web site. You can find answers to some commonly asked questions about Social Security.

  • ElderWeb provides the latest Social Security news and links to other sites that offer information about Social Security

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